Monday, April 30, 2012

China and rebalancing

I thought some humor was needed for an image
that seems to be hauntingly foreboding.
Some news citizens,

The Wall Street Journal has this article on China's economy cooling and an Op/Ed at Forbes about China starting to put some screws into foreign car makers.  Now what does it mean?  This take me back to when the US economy was starting to slow down in early 2007; back when the scourge known as Sex in the City was still in the memories of many latte addled women.  Well one thing I remember was that many economic analysts were trying to put a positive spin on the numbers, and it feels the same here.  Yes Chinese disposable income has grown, but one quarter of growth in consumer spending doesn't mean anything, and why is it that so many periodicals and analysts focus on quarterly statistics?  In my mind these fundamental facts are true about China.

They largely have followed Japans economic model, there are serious limitations to what they are doing. A key thing that we forget about an economy, is that it isn't growth rates, but profitability that determines real growth. Not only China is doing this, but this has been a strategy of Asian economies for a long time. Remember the Asian tigers of the early 90s, followed by the Asian Financial crisis later that decade?

China is incredibly poor, and very populated.  Now this has helped given that they have a large and cheap pool of workers that have allowed them to build their export economy; however, one thing that you cannot forget, is that their demographics is terrible.  A fertility rate of 1.5 is not good, it is below the replacement rate, and their culture and society is not one that is conducive to immigration.  This means China is racing against the clock.  They, and by they I mean the CCP, need to get their economy to a level where they can take the economic hit and not send the nation into chaos.

But that is already happening.  Protests are rampant, and no these aren't protests like they are in the United States.  These are people with problems far greater than our own protesting a nation that actively tries to suppress them.  Remember the Uighyr protests? The Tibetan protests?  They were suppressed very harshly by the Chinese.  And I know that some would brush off and say that most of the deaths were the result of the riots themselves and not the government, but when was the last time you say paramilitary groups, think FBI, NSA, or CIA, suppress protests in the United States? As bad as we have gotten we are no where near the levels of that China is when it comes to being a police state.  And the fact that more and more protests are occurring in China, and least we forget, the CCP is amidst its own internal struggle at the moment, these are creating conditions that show a country that is having trouble and is not as strong as we believe them to be. 

I haven't gotten into the Chinese real estate bubble, stimulus bills, or the boon doggle high speed rail has been for them, which really just illustrate the other unseen malinvestment that goes on in that nation.

Given these items, it is highly doubtful that Chinas' economy is 'rebalancing' it is more likely the economy is on the verge of crashing and the party leaders are scrambling for a way to prevent it.  Even a slow down, and the possible unrest they would face, is better than a crash and the 100% likely hood of unrest, with the small possibility of rebellion.

As always, humbly yours. 

Cogitans Iuvenis

And yes, winter is coming fellow citizens. I believe it wholeheartedly. When Caetlynn Stark talks about the knights of summer, she is describing our generation.  What we are experiencing now is the equivalent to the war of the five kings, all the while a bigger menance is lurking in the backgrounds.  Do not be like the Lannisters, the Baratheons, Tullys, or Martells.  Be like the Starks, likle the Nights Watch.

Friday, April 27, 2012

Tax burdens and OECD nations. A beginning.

Funny that an organization with
predominately European nations
has an image that hides Europe.

Salve Citizens!
Browsing the news this morning citizens, and I came upon this article on msn.  The title is: US taxpayers get off easy, compared to some others.  Well this will be interesting.  Let’s dive in shall we?

"If you just filed your taxes this month, chances are you’re not feeling a huge amount of goodwill toward the U.S. tax system.

Still, you may want to hold off on those plans to move overseas to avoid the tax man.

The Organization for Economic Co-operation and Development this week released a tax comparison for typical wage earners in it 34 member countries, mainly the world's wealthier, democratic countries in Europe, Asia and the Americas.

Surprise: Most of them are paying a lot more than you. (This isn’t really a surprise to most Americans.  Even if they don’t know any facts about taxes in other countries, Americans, from my experience, assume that we pay less than ‘Socialist’ Europe.)

The OECD report looked at the total labor costs for full-time, private sector workers – that is, gross wages plus whatever taxes the employer is required to pay on that employee’s behalf. Then they calculated how much of that total went to federal, state or regional taxes.

In the U.S., an estimated 29 percent of the average worker’s total labor costs went toward taxes last year. (So it is estimated that almost a third of your paycheck goes to the government.  Maybe it’s just because I received a parking ticket because I was late out of meeting.  But the idea that a third of our labor cost went to taxes irritates me, and would probably explain why, along with regulations; we are losing jobs to overseas competitors.)

That’s far lower than Belgium, Germany, Hungary and France, where taxes accounted for about half of an average worker’s labor costs. (But they get all those nice social services right so it’s worth it right? Except even with obscene taxation levels they cannot pay for their programs; yes the link is to an article about riots due to gas shortages and pension reform, but trust me citizens it is all related.)

There are a few countries where workers are getting more of a tax break. The countries with the lowest tax bills included Mexico, New Zealand and Chile, where just 7 percent of the average worker’s total costs went to taxes. (Wonder which ones have higher growth rates and generally better economic prospects?)

The OECD found that taxes increased in 26 of the 34 OECD countries last year. The U.S. was one of the few countries to see a decrease because of cuts in Social Security contributions. (Good, that program is a scam anyways.) That offset the end of the Making Work Pay tax credit.

For comparison purposes, the calculations assumed the average worker was single and without children. The OECD did separate calculations for other individuals and families with children in its full report.

Matthias Rumpf, a spokesman for the OECD, said the U.S. ranks lower than average in part because it does not have compulsory health care. That means Americans’ health care costs aren’t included in their total taxes. (Well we learn two things here.  1) Health care isn’t free and it costs money. And 2) that additional cost health care would add to our tax base would be quite a bit)

The OECD also didn’t include mortgage interest rate deductions in its calculation, in part because it’s difficult to make assumptions about how much a person would pay and thus deduct. (Frankly things like credits and deductions should not factor into the tax rate.  People and business do not make decisions on where to live and do business because of business. Yes many businesses will do business in areas that offer tax breaks, but usually there are other benefits as well such as good location and a generally sound business environment.  A friendly business environment will beat a one off tax break, which might not exist in a few years, any day.)

Do you think Americans should be paying more or less in taxes? Discuss it in the comments below or on our Facebook page. Do you think Uncle Sam is fair when it comes to income taxes?”

Fortunately for us 79% of Americans do not want to pay any more in taxes, and a full 60% actually want to see taxes decrease.  Now I know that almost as many Americans would cry bloody murder if whatever government program they used is cut off, but we can work on that.  The article gives us an interesting bit of information when it mentions the OECD nations and their tax rates.  And given that I have gotten the quips and my opinions out its time to do a little analysis.

The OECD is a collection of high income or middle to high income nations.  Membership generally means that you are considered a developed nation or very high level developing nation.  Another way to look at is by the HDI index, you probably would not be an OECD nation unless you are at least in the 2nd quartile in terms of Human development.  What the chart shows below, admittedly from a very small sample, is that the nations with lower taxes burdens had faster growing economies. 

As we can see here from the graphic, it looks like the nations with the low Tax percentage of Labor also enjoy higher growth rates.  And a correlation analysis does show that there is a negative relation between the tax percentages and growth rates.

 Now, this in and of itself doesn’t mean anything, the data sample is too small to make any confident conclusion, I ran a regression analysis and the goodness of fit, or R Square in the Regression statistics, was well below the .80 generally accepted.   For those who do not know what goodness of fit means, it simply states whether or not the regression formula that was calculated does a good job corresponding with the data that was used to create the formula.  If the regression formula doesn’t fit very well it either means that there isn’t a correlation between the variables, or, as I think is the case in this instance, there is too little data presented.

 Moreover, of the economies selected the entire one the ones with the higher growth rates were still developing nations, albeit very far along the development process.  A lot of things a factor into economic growth; poverty level of population, population growth rates, energy usage, technology, business environment and so on and so forth. Taxes make up a small portion of the many variables that will affect your growth rates, but they do affect them make no mistake about that.

I will do more thorough statistical analyses on the OECD nations in the future.  It is interesting to see how much tax burdens affect growth rates in relatively developed economies.  I am predisposed to think of them to think that they are harmful to gdp growth, but in the end you have to make a conclusion based off of data.  I think that a sample of the 34 OECD nations would be large enough to let us now if tax rates as a % of labor income had an effect on growth or not.  I am also pleasantly surprised by Chile.  Their tax rates are very low, they enjoy good economic growth and they have made up considerable ground to their next door neighbor, Argentina. 

As always citizens humbly ours,

Cogitans Iuvenis

Thursday, April 26, 2012

What makes a nation prosperous? A statistical analysis Part 1.

Oh how I wish someone would
remake this game.
Greetings Citizens,

We are very lucky to live in a republic that possesses a bounty of riches, even with the worst economic conditions that have existed in a century, the denizens of this great land are still extremely well off when compared to the rest of the world. And that raises a question citizens. Why are we prosperous?  Some would say it is our natural resources, and yes natural resources matter, but there are nations that have abundant resources yet are still pour.  Is it our size, which is able to command large segments of market share?  There too you can see populated nations that are very pour, and the US is rare in the fact that we have such a large population and are so wealthy.  How about technology, education, demographics, or government?  The answer is that it is all of these thing and more.  A while back, before I had lost my data due to a hard drive crash; I had reams of data analysis the most economically prosperous nation to find the answer.  I have started the work again, but realized that it would be hard to get weeks’ worth of data reentered an analyzed in a weekend.  Instead I decided to do short posts updating my research and personal edification.  And the question is why nations are prosperous?
                Before we start we have to think about where we will get our data from.  Progressives general decry using GDP as a measure of prosperity, because such data shows the value of the free market which is something the hard left despises, but GDP is the best way to measure prosperity.  Things such as well-being or a happiness indexes, favored by the hard left, are far too subjective to be of any real use, and moreover, just because an individual is ‘happy’ does not mean they wouldn’t wish to improve their material condition.  You could take the happiest man in Ghana, who for the sake of argument, is happier than anyone in the United States and I would be willing to wager a healthy sum, that if given a chance, he would jump at the opportunity to have the standard of living that an American does.  GDP works, relatively well because it is a calculated on what is produced or adds value to society.  Now I must caution you, that GDP can be manipulated to show growth when it doesn’t exist and that there are ways to goose GDP.  China comes to mind, ignoring the obvious fact that many of Chinas' provinces are fudging their economic numbers to look better than the national average; there is a more fundamental flaw that China perfectly exhibits.  That is that malinvestment, i.e government spending or government directed private spending, can show positive GDP growth numbers when in fact that what is being produces adds little to no real economic value at that time. We must keep this in mind when looking at GDP, it can be goosed or cooked, but despite this fact, it still is one of the better ways we have of measuring prosperity.
                Now for my research I focus on GDP per capita; as GDP alone doesn’t indicate a nation’s wealth and well-being.  Once again, a nation like China, may have the 2nd largest economy in the world, and while certainly an impressive feat, their GDP PPP per capita shows them to slightly better off than nations like East Timor, or Bosnia, or Nambia. Whereas the United States has a third of the population but almost 6 times the GDP per person when compared to China.  This means that the United States has more disposable wealth, or power, relative to its population base. In fact, using IMF data as they have the most up to date data that I have found, and keeping in mind that I will be using GDP PPP, the United States ranks 7th in the world for GDP per capita; and it is the only nation with a population over 100 million in the top 20 most prosperous nations.  This of course changes when using World Bank or CIA data, but for the sake of my arguments the IMF serves just fine for research. I will be predominantly focusing on these economies, as they are the most successful, but for now I will cast a larger net.
                I went and downloaded a lot of world data to analyze, GDP, Population, Corruption levels, Freedom levels, and Democracy levels.  The question is why?  Because resources alone don’t dictate whether or not a nation is prosperous.  Russia is the 2nd largest oil producing nation in the world, and based off that alone they should be very prosperous like the nations of Qatar or Brunei, yet their GDP per capita is 54th.  The question is now, why? There are plenty of nations with natural resources, yet their people are impoverished.  This caused me to look at a bunch of other data sets try to see if there is a correlation amongst htem, and one thing that was very obvious about Russia was that they ranked very poorly in terms of corruption and democracy. 
                I pulled all the data I could find and then organized it into these charts.  It should be noted that the higher the number the better.  So a nation with a corruption level of 9 has less corruption than one with a level of 8.  Here are two charts.  The top one plots corruption along the x axis, and shows the effects that an increase of corruption has on the democratic level of a nation and its GDP per PPP.  The second chart is the reverse, it plots the affects of decreasing democratic levels on societal corruption and GDP.


                It is pretty apparent that there is some correlation between the two, though there is nations like Singapore that fare poorly in terms of democracy but very well in terms of corruption.  The first chart shows that nations with very low corruption levels tended to have very high levels of democracy, and high GDPs, while nations with high levels of democracy were not necessarily free from corruption.  Nations with a democracy level of 9 had low levels of ocrruption, but we see a percipitous drop even moving over to the lowest level.  Now, being ranked higher in either category generally means that a nation will posses a better GDP per capita.  So what does this mean? The democracy chark shows more drastic changes at first glance, but I concluded that corruption made a bigger differnce in a nations GDP PPP.  How? I calcualted the slope of the axis for each chart, this would give me a visual representation of what would have a greater impact on a nations standard of living; outside of using a statistical analysis which I will do in the future. The corruption chart was steeper,  measuring a $ 5,765 decrease in GDP PPP for every increasing level of corruption versus a $ 3,767 decrease for every decreasing level of democracy.  It is also interesting to note that any nation with a corruption level of 7 was pretty close in terms of GDP per PPP. And any democracy level lower than a seven had little affect on a nations subsequent GDP PPP, at least visually on the chart.  Why is that?  Because economics cares little about democracy that's why. Let me explain.

Now I would need to do a statistical analysis of this data, and at some point I will.  But at first glance it appears that for economic prosperity you need two things, outside of natural resources or a favorable location, and that is democracy and low corruption.  Corruption and democratic failing will be tolerated up to a point, but after that point is reached there are precipitous declines in a nations GDP PPP.  That is why a nation likes France, with a somewhat dysfunctional electorate system according to the democracy index, 7.77, and mild corruption problems, 7, still has a relatively high standard of living.  Things could definitely improve for France, but it isn’t so bad as to make doing business in that country in tolerable.  Then you have nations like Singapore, which has somewhat low levels of democracy, 5.89, but has very low corruption issues, 9.2.  This goes to show that while democracy is generally good for business, corruption matters more.  A businessman would rather do business in a nation run by an honest dictator that a corrupt democracy.  Why?  Because when corruption levels are low doing business is easier and businessmen are less worried that they will wake up one day and find their assets seized, ala ArgentinaArgentina is a great example of why corruption matters more than levels of democracy.

Now before I continue I must say that it isn't that democracy doesn't matter, it does, but simply that corruption is the biggest factor; and while despotic nations are also often the most corrupt, just because a nation is democratically inclined does not mean necessarily mean that corruption will not be an issue.  Argentina is a great example of this fact. Argentina is by all accounts a democracy, admittedly a flawed one according to the democracy index but a democracy none the less, the freedom index rates it a free nation, and their human rights record has improved from the dirty war years.  However, their government, outside of adopting ill-thought out socialist leaning policies, is corrupt.  I mean very corrupt, they have the nations of Greece, Bangladesh, Syria and numerous third world nations as bed fellows. Argentina seized pensions, democractically of course, a few years ago; ostensibly to guarantee pensions funds, businesses and international markets recognized it for the simple cash grab that it was. And at the turn of the millennia the nation defaulted on its debt obligations, once again doing so via the democratic process.  Argentina has a history of not playing by the rules and doing whatever is in its short term benefit, sacrificing long term well-being.  Democratic nation or not business frown on this sort of behavoir, it drives businesses away and it will ruin a nation economically.  Argentina at one point had a GDP per capita similar to Germany, France, and Canada at the turn of the last century.  It now has a GDP per capita about half of France.
                So how does this relate to the United States?  Well citizens, our republic fares pretty well. We are solidly democratic, though we are nearing flawed democratic status, and corruption levels are lower than many, but we have had an alarming trend over the last decade with ever increasing levels of corruption. At the turn of the millennia we had a corruption level of 7.6, we are now at 7.1.  Personally, anything less than an 8 for our nation is pathetic, and the fact we are trending the wrong way is not good.  It shouldn’t be surprising considering the increase of government intrusion in our lives due to the war on terror, but progressives would be dismayed, or would simply ignore, the fact that the largest increase in corruption occurred under Obama.  This isn’t meant to exonerate the former president, but it isn’t hard to pinpoint why corruption has increased so dramatically in the United States.  Two words or all that it takes, “Stimulus Bill”.  Corruption is a growing problem in the United States and it certainly has started to affect our prosperity.   

Of the top ten countries in GDP PPP, the US is the 5th worst in terms of corruption, and if you look at our neighbors you will see that those more corrupt than us, outside of Taiwan, are oil producing nations. It isn’t a stretch to assume that the abundance of oil allows these nations a more comfortable buffer when dealing with corruptions’ negative impact on their economy than would otherwise exist.  Corruption has become a drain on this nation; the housing and debt crisis are just the latest manifestations of the malignant tumor that is corruption. The question is, how do we fix it? Well a healthy dose of Mises will certainly give you many ideas on what can be done? There are other blogs where you can go to realize that you are not the only citizen that cares about a prosperous America.  As for myself I will write more about what makes nations prosperous and what can be done for our republic in the near future.

Humbly yours,

Cogitans Iuvenis

Wednesday, April 25, 2012

Is multiculturalism an asset or a problem in America?

I don't care what some stupid comic book writer wrote
Superman would never renounce citizenship to the republic

Salve Citizens,

Captain capitalism referenced three articles that bear thinking about.  Now many individuals would quickly dismiss the writings as those from rightwing extremists or racist, but that would be easy and intellectually lazy.  The fact is that there are negatives and positives to every action you take, and numerous unintended consequences can result, ignore obvious cultural, religious, and ethnic differences and you risk the worst effects of balkanization, Yugoslavia is a great example as it underwent drastic political changes over the course of ten years.  Tens of thousands of people were killed, an entire region destabilized, and it wasn’t until action was taken by a world power, the United States, that any sort of normalcy returned. Now how does this relate to the rest of Europe or the United States?
Europe’s is a relatively easy one to go over.  Europe has low birth rate, so low in fact that they are below the replacement rate of around 2.1 births.  This means that Europe’s’ population will contract over time, which negatively effects economic growth and is even a bigger crisis considering their massive social safety nets.  The only way Europe can maintain their welfare system and economic growth, outside of technological advances and market reforms, is immigration.  Immigrants now account for a growing portion of their populations.  Now this isn’t a problem in and of itself.  Immigrants are often driven and they tend to lower wages in the fields they enter into because they are willing to work for less; many progressives and border conservatives would tell you this is a bad thing however they are ignoring the corresponding effect of increasing affordability of services. The problem for Europe, as far as many Europeans are concerned, is that many of these immigrants are Muslim.  Youtube and blogs are now showing many alarming instances of violence, intimidation, and aggression between Muslim Europeans and immigrants and the secular or Christian Europeans.  This isn’t all that surprising.  We forget that Europeans and many Levant and North Africans have had a bloody history filled with strife.  The Spanish and Moors fought bloody battles over the Hispanic peninsula for hundreds of years, and the Ottomans clashed with the Slavs and Hungarians, which laid the seeds for future strike in the late 20th century.
Now you might say that foreign immigrant’s only account for a small percentage of the people’s population, and that is true, but that may not always be the case.  The division between ethnic lines is much greater in Europe than it is in the United States simply because there are thousands of years of history that help foster those divisions.  Many Muslims have not forgotten their people’s domination by European powers during the late 19th and early 20th centuries, and while a majority wishes nothing more than to live their lives in peace, it only takes a very active small minority to create unrest.  Moreover, despite the spiritual malaise Europeans have been suffering under for the last half century; do not think for second old European sentiments will reemerge.  A growing number of individuals are assuming that Europeans will meekly fade into twilight as Europe because part of Pan-Islamica, I do not see this happening, though I will not discount it entirely.  We have to remember what Europe fundamentally is and was.
 Today it is a wealthy aging culture and subset of a civilization, but we forget that for much of our history, outside of the dominance of the Romans and Greeks, Europe had been a barbaric backwater.  Europe, due to geography, is home to more nations than any other continent.  This helped create the conditions that ultimately would lead to their domination as competition forces adaption, and adaption eventually resulted into the enlightenment, the realization of the free market, and the adoption of republicanism.   One side effect of this competition is that Europe has had a very bloody history, perhaps the bloodiest out of any region in the world.  For nigh on two thousand years some part of Europe was at war with one another, and Europe was the birth ground of the two bloodiest wars in human history.  Taking this into context I actually fear a bit for the moderate European Muslim. For as more and more Europeans feel that they are losing their home and culture you will see more and more acts of violence.  It would be a terrible site to see France or Germany go the way of the Balkans, and while I don’t think balkanization is likely in the near future, you can never discount which way things will go.  There will be a lot of things the Europeans will need to do, proper assimilation of immigrants being of utmost importance, to ensure that neither a European cultural disappearance nor ethno-religious feuding ensues. Now what about the United States?
  Immigration has been a major concern for our nation for, well since forever really, but it feels as if it is of prime importance now.  The US has always feared losing its culture to immigrants be it Benjamin Franklins feelings that Germans could never assimilate, to the Anti-Irish sentiments of the 19th century.  Today Hispanic immigration is a major concern, and I feel that the two stances you most often see on the internet, that it is either a cultural travesty waiting to happen, or that the fears of Hispanic immigrants are vastly overstated, or both wrong, or not entirely right. Immigration is a net plus for the United States, and in the near future you will probably see active competition between nations for immigrants due to global population growth slowing.  The US is much more fortunate than Europe, is that unlike Europe, the US was built on immigration so our cultural and political systems are better suited to handle the negative effects it has on a population.  Moreover, and this is very important, the US has done being nationalism.  I can see many members of the left decrying this as terrible and that my statement brings up the ghost of fascism, but they need to understand what I mean by nationalism when I say it.  I do not mean it in the sense that the one nation is better than others and is meant to dominate, though there is a national centric self-assuredness that we hold, but that we actively seek out what it means to be an American and try to instill it in our citizens.  Now this isn’t to say that we haven’t lost ground or that internationalists haven’t made some ground in trying to decrease American patriotism, they have, but they have not been nearly as successful as they have been in Europe.  There is no spiritual malaise in the United States, and in many parts of the country, be it the manosphere or with Ron Pauls campaign we are seeing it fight back.
                Even though the US is far better suited to handle immigration and the resultant cultural strife, we cannot discount the fears of others, for they are not entirely wrong.  As George Freidman writes in the Next Hundred Years there will be continued discord in the Border States, and unless the US figures out how to deal with a growing Hispanic population, there is risk strife and fighting along our southern border.  These fears are displayed when Arizona, tired of our central governments inaction, decide to take matters into their own hands.  There is growing violence along the border due to the pseudo war being fought amongst the Cartels and the Mexican government and it is adversely affecting our border states.  Despite the claims of many the violence will not go away anytime soon because it isn’t really due to the Drug War, though it is a popular concept held in many internet forums, it is due to corruption.  Corruption is pervasive in Mexico, and where corruption exists so does civil strife. And this is the greatest threat that faces America, not the fact that Hispanics are immigrating into this nation.
      You see citizens, while there are cultural differences between the Europeans and the Muslims immigrating into their nations is vast, it is much smaller between the average American and the Hispanic immigrants. Both come from Christian traditions and have cultures influenced by European nations that were in turned influenced by ancient Rome.   The problem for those south of the Rio Grande is that their colonial masters, Imperial Spain, did a rather poor job of instilling the best fundamental tenants of individual freedom and responsibility whereas the US and Canada lucked out with Great Britain being our benefactors.  Where Spain exploited its colonies, the British did so to a much lesser degree and largely allowed the colonies dictate their own affairs.  This is the crux of the matter.  The Hispanic immigrants are scions of western civilization like we are, and the differences between our cultures, while not trivial, can be broached.  What it is imperative that we do as a nation is to dump this multiculturalism stick.  We are not a nation of many cultures, or rather we are, but not of equal cultures. We are a nation of one culture with many subcultures.  There is an overarching culture of this nation and it is time we acknowledge this and actively teach it in schools.  When our forefathers spoke of the melting pot they had it right.  American culture, and it has done this throughout its history, has absorb the best of new foreign cultures while discarding the chaff.  Corruption is that chaff that we must fear, not the Hispanics themselves.
                So what is it citizens that we can do to ensure that we are able to assimilate new immigrants into our country and maximize the benefits of illegal immigration while minimizing the side effects?  And it is simple really, no fancy programs, no speeches, it simply takes one thing and one thing only; that we stop listening to progressivism and employing progressive policies. At its heart, despite the well intentions of many a progressive, it is a soul killing and self-loathing ideology simply because it means you will be dependent on someone else.  Those on the government dole, or who are hiding in ‘sanctuary’ cities do not look at their bureaucratic betters as saviors, they resent them.  They resent the fact that for every single ‘good deed’ that they do there are dozens more that hurt.  They resent the patronization that is part and parcel of programs like affirmative action.  They resent the crumbs that are tossed their way as if they (the bureaucratic betters) were doing them a favor.  If you simply allowed them to work, and in conjunction expected them to assimilate, then they will do so.  American culture, pre-sexual revolution anyways, is superior and lets not be ashamed of it.  Americanism, it is a concept that changed a concept and can be best summarized by super man himself, old school superman not that terrible movie Superman Returns.

“Truth, Justice, and the American way (kicking ass)”

But Cogitans that sentiment is full of jingoism.  Too which I respond, I don’t care.

Humbly yours citizens.

Cogitans Iuvenis

Monday, April 23, 2012

It isn't the winds fault that the building fell down due to decades of neglect.

An article talking about how our president has become more aggressive using executive powers to pass laws.

Image: Barack Obama
Consul Barrackus Obamicus
WASHINGTON — One Saturday last fall, President Obama interrupted a White House strategy meeting to raise an issue not on the agenda. He declared, aides recalled, that the administration needed to more aggressively use executive power to govern in the face of Congressional obstructionism. (Read that the congress that was voted in to curb Obamas’ legislative plans, and for the most part doing a terrible job at it, are frustrating him. Somehow I feel our constitution will not fare well in the next couple of paragraphs).

 “We had been attempting to highlight the inability of Congress to do anything (If only.  The only time things are going well is when it seems that nothing gets done.  Remember the critically important, i.e. manufactured, debt crisis? A beautiful period were congress was too busy scare mongering to pass any more terrible laws.” recalled William M. Daley, who was the White House chief of staff at the time. “The president expressed frustration, saying we have got to scour everything and push the envelope in finding things we can do on our own.” (In plain English, how can we twist or bend the constitution that allows us to rule more and more by decree so we can get what we want passed.)

For Mr. Obama, that meeting was a turning point. As a senator and presidential candidate, he had criticized George W. Bush for flouting the role of Congress. And during his first two years in the White House, when Democrats controlled Congress, Mr. Obama largely worked through the legislative process to achieve his domestic policy goals (It isn’t hard to do that when you had a super majority, something which rarely ever happens. It is also telling that the article neglects to mention what was worked through, because by and large nothing was done.  The democrats have the dubious honor of having a once in a century occurrence, a filibuster proof majority, and they couldn’t get anything done; thankfully.)  

But increasingly in recent months, the administration has been seeking ways to act without Congress. Branding its unilateral efforts “We Can’t Wait,” a slogan that aides said Mr. Obama coined at that strategy meeting, the White House has rolled out dozens of new(doomed to fail) policies — on creating jobs for veterans (good luck. The free market would do a better job), preventing drug shortages (were in the constitution is it the federal government’s responsibility to make sure people who are on pills can get them?), raising fuel economy standards (Didn’t he already do this?), curbing domestic violence (Not to disparage those who suffer from domestic violence but this has been a perennial problem as far as I can remember. Generally when ‘issues’ are perennial problems the problem is manufactured.  The fact is, despite what femnazis would have you believe, there aren’t a whole lot of men, let’s not pretend that this would be a gender neutral issue shall we, going around and beating women) and more.

Each time, Mr. Obama has emphasized the fact that he is bypassing lawmakers. When he announced a cut in refinancing fees for federally insured mortgages last month (Because that will accomplish so much for those that have mortgages that are tens or hundreds of thousands of dollars underwater), for example, he said: “If Congress refuses to act, I’ve said that I’ll continue to do everything in my power to act without them.”

Aides say many more such moves are coming. Not just a short-term shift in governing style and a re-election strategy, Mr. Obama’s increasingly assertive use of executive action could foreshadow pitched battles over the separation of powers in his second term, should he win and Republicans consolidate their power in Congress.

Many conservatives have denounced Mr. Obama’s new approach. (But are secretly want to have a conservative, and I use that term loosely, president who will do the same.) But William G. Howell, a University of Chicago political science professor and author of “Power Without Persuasion: The Politics of Direct Presidential Action,” said Mr. Obama’s use of executive power to advance domestic policies that could not pass Congress was not new historically. Still, he said, because of Mr. Obama’s past as a critic of executive unilateralism, his transformation is remarkable. (This is only news if you took what he was saying at face value; those that have the ability to read between the lines or look at what he pushed for in the past.  Words only have meaning from corresponding action.  If a person with a history of pushing creationism in public schools started talking about the need to keep political agendas out of the class room you wouldn’t take him seriously way.  So why would you take a president, whose previous legislative, however bare, and private correspondence indicated a man who would govern very differently from what he promised, seriously?)

 “What is surprising is that he is coming around to responding to the incentives that are built into the institution of the presidency (No they weren’t. These are all relatively recent phenomena that we take as truth.  The presidency was designed to be weak domestically and strong internationally.  In determining the laws of the nation he would have little power, but in enforcement and defense he would have the power required.),” Mr. Howell said. “Even someone who has studied the Constitution and holds it in high regard (Who in this country says they don’t?  I have never ever heard anyone say anything negative about our constitution.  But I hear people all the time, the president included, advocate policies that are in direct violation of a pretty plainly worded document.) — he, too, is going to exercise these unilateral powers because his long-term legacy and his standing in the polls crucially depend upon action.”

Mr. Obama has issued signing statements claiming a right to bypass a handful of constraints — rejecting as unconstitutional Congress’s attempt to prevent him from having White House “czars” on certain issues, for example(I could be wrong but I cannot think of anything in the constitution that prohibits the congress from doing this. The constitutional never directly stated there were to be cabinet members, nor did it prohibit the president from appoint members to cabinet positions to help him execute his role as chief executive for each. What disturbing is the number of czars Obama has had, which is equal to the number of czars every president from FDR had till now, excluding our previous president who also had predilection for appointing czars.  Obama has 38 according to this chart, more than three times the amount of FDR! Even more absurd is that we have an AIDS czar). But for the most part, Mr. Obama’s increased unilateralism in domestic policy has relied on a different form of executive power than the sort that had led to heated debates during his predecessor’s administration: Mr. Bush’s frequent assertion of a right to override statutes on matters like surveillance and torture.

“Obama’s not saying he has the right to defy a Congressional statute,” said Richard H. Pildes, a New York University law professor. “But if the legislative path is blocked and he otherwise has the legal authority to issue an executive order on an issue, they are clearly much more willing to do that now than two years ago.” (Because of the Republican wave last election cycle.)

The Obama administration started down this path soon after Republicans took over the House of Representatives last year. (This begs the question.  Was the President ever going to try and work with the Republican majority?) In February 2011, Mr. Obama directed the Justice Department to stop defending the Defense of Marriage Act, which bars federal recognition of same-sex marriages, against constitutional challenges. Previously, the administration had urged lawmakers to repeal it, but had defended their right to enact it.

In the following months, the administration increased efforts to curb greenhouse gas emissions through environmental regulations, gave states waivers from federal mandates if they agreed to education overhauls (Because all previous federal government directives for education were stellar success), and refocused deportation policy in a way that in effect granted relief to some illegal immigrants brought to the country as children. Each step substituted for a faltered legislative proposal.

But those moves were isolated and cut against the administration’s broader political messaging strategy at the time: that Mr. Obama was trying to reach across the aisle to get things done (And so did Bush, and Clinton, and Reagan and so on and so forth.). It was only after the summer, when negotiations over a deficit reduction deal broke down and House Republicans nearly failed to raise the nation’s borrowing limit (i.e. the republicans reneged on their promise to those who elected them. Ensuring that greater economic and fiscal damage will come later rather than deal with it now.), that Mr. Obama fully shifted course.

First, he proposed a jobs package and gave speeches urging lawmakers to “pass this bill” — knowing they would not. A few weeks later, at the policy and campaign strategy meeting in the White House’s Roosevelt Room, the president told aides that highlighting Congressional gridlock was not enough.

“He wanted to continue down the path of being bold with Congress and flexing our muscle a little bit, and showing a contrast to the American people of a Congress that was completely stuck,” said Nancy-Ann DeParle, a deputy chief of staff assigned to lead the effort to come up with ideas.

Ms. DeParle met twice a week with members of the domestic policy council to brainstorm. She met with cabinet secretaries in the fall, and again in February with their chiefs of staff. No one opposed doing more; the challenge was coming up with workable ideas, aides said.

The focus, said Dan Pfeiffer, the White House communications director, was “what we could do on our own to help the economy in areas Congress was failing to act,” so the list was not necessarily the highest priority actions, but instead steps that did not require legislation.

Republican lawmakers watched warily. One of Mr. Obama’s first “We Can’t Wait” announcements was the moving up of plans to ease terms on student loans (As a recent graduate myself I can sympathize. A generation of individuals has been suckered into believing that taking out $ 40,000 for a bachelors' in pottery making was the ticket to financial wellbeing. But ultimately this won’t help. If we really want to address this issue then we should let student loans be discharged through bankruptcy.) . After Republican complaints that the executive branch had no authority to change the timing, it appeared to back off.

The sharpest legal criticism, however, came in January after Mr. Obama bypassed the Senate confirmation process to install four officials using his recess appointment powers, even though House Republicans had been forcing the Senate to hold “pro forma” sessions through its winter break to block such appointments.

Mr. Obama declared the sessions a sham, saying the Senate was really in the midst of a lengthy recess. His appointments are facing a legal challenge, and some liberals and many conservatives have warned that he set a dangerous precedent.

Senator Harry Reid of Nevada, the Senate Democratic leader, who essentially invented the pro forma session tactic late in Mr. Bush’s presidency, has not objected, however. Senate aides said Mr. Reid had told the White House that he would not oppose such appointments based on a memorandum from his counsel, Serena Hoy. She concluded that the longer the tactic went unchallenged, the harder it would be for any president to make recess appointments — a significant shift in the historic balance of power between the branches.

The White House counsel, Kathryn Ruemmler, said the Obama administration’s legal team had begun examining the issue in early 2011 — including an internal Bush administration memo criticizing the notion that such sessions could block a president’s recess powers — and “seriously considered” making some appointments during Congress’s August break. But Mr. Obama decided to move ahead in January 2012, including installing Richard Cordray to head the new consumer financial protection bureau, after Senate Republicans blocked a confirmation vote.

“I refuse to take ‘no’ for an answer,” Mr. Obama declared, beneath a “We Can’t Wait” banner. “When Congress refuses to act and — as a result — hurts our economy and puts people at risk, I have an obligation as president to do what I can without them.”

The unilateralist strategy carries political risks. Mr. Obama cannot blame the Republicans when he adopts policies that liberals oppose, like when he overruled the Environmental Protection Agency’s proposal to strengthen antismog rules (Good) or decided not to sign an order banning discrimination by federal contractors based on sexual orientation.

The approach also exposes Mr. Obama to accusations that he is concentrating too much power in the White House. Earlier this year, Senator Charles E. Grassley, Republican of Iowa, delivered a series of floor speeches accusing Mr. Obama of acting “more and more like a king that the Constitution was designed to replace” and imploring colleagues of both parties to push back against his “power grabs.” (Very true Senator, but were you saying the same things about a previous strong executive?)

But Democratic lawmakers have been largely quiet; many of them accuse Republicans of engaging in an unprecedented level of obstructionism and say that Mr. Obama has to do what he can to make the government work. (A few years ago we could have switched the parties)  The pattern adds to a bipartisan history in which lawmakers from presidents’ own parties have tended not to object to invocations of executive power.

For their part, Republicans appear to have largely acquiesced. Mr. Grassley said in an interview that his colleagues were reluctant to block even more bills and nominations in response to Mr. Obama’s “chutzpah,” lest they play into his effort to portray them as making Congress dysfunctional. (The Republicans could also be thinking that being too aggressive at this point in an election cycle could snatch defeat from the jaws of victory.)

“Some of the most conservative people in our caucus would adamantly disagree with what Obama did on recess appointments, but they said it’s not a winner for us,” he said. (Unfortunately he is right)

Mr. Obama’s new approach puts him in the company of his recent predecessors. Mr. Bush, for example, failed to persuade Congress to pass a bill allowing religiously affiliated groups to receive taxpayer grants — and then issued an executive order making the change.

President Bill Clinton increased White House involvement in agency rule making, using regulations and executive orders to show that he was getting things done despite opposition from a Republican Congress on matters like land conservation, gun control, tobacco advertising and treaties. (He was assisted by a White House lawyer, Elena Kagan, who later won tenure at Harvard based on scholarship analyzing such efforts and who is now on the Supreme Court.)

And both the Reagan and George Bush administrations increased their control over executive agencies to advance a deregulatory agenda, despite opposition from Democratic lawmakers, while also developing legal theories and tactics to increase executive power, like issuing signing statements more frequently.

The bipartisan history of executive aggrandizement in recent decades complicates Republican criticism. In February, two conservative advocacy groups — Crossroads GPS and the American Action Network — sponsored a symposium to discuss what they called “the unprecedented expansion of executive power during the past three years.” It reached an awkward moment during a talk with a former attorney general, Edwin Meese III, and a former White House counsel, C. Boyden Gray.

“It’s kind of ironic you have Boyden and me here because when we were with the executive branch, we were probably the principal proponents of executive power under President Reagan and then President George H. W. Bush,” Mr. Meese said, quickly adding that the presidential prerogatives they sought to protect, unlike Mr. Obama’s, were valid. (Glad to know some of our betters have a sense of irony)

But Jack L. Goldsmith, a Harvard law professor who led the Justice Department’s Office of Legal Counsel during the George W. Bush administration, said the Obama administration’s pattern reflects how presidents usually behave, especially during divided government, and appears aggressive only in comparison to Mr. Obama’s having been “really skittish for the first two years” about executive power.

“This is what presidents do,” Mr. Goldsmith said. “It’s taken Obama two years to get there, but this has happened throughout history. You can’t be in that office with all its enormous responsibilities — when things don’t happen, you get blamed for it — and not exercise all the powers that have accrued to it over time.”

(Fair enough, it isn’t as if Obama isn’t doing anything that previous president hadn’t done, but therein lies the problem.  Neither Obama, Bush, nor any president wants to do harm to this country, or even the constitution.  But we have allowed dangerous ideas; like that the constitution is a living document or is open to ‘interpretation’ as well as the need to have a very strong president, proliferate and infect our system.  A little over a hundred years ago we had a democratic president resisting calls to try and enact government involvement into people’s lives and into the economy. Today we are lucky if we can get a republican presidential candidate, excepting Ron Paul of course, who can even accurately describe how a free market or society is supposed to work.  And that is the responsibility that falls upon us citizens.  We must undo a centuries worth of damage.  We need to reroute, reinforce, and relay the bricks of freedom that make the foundation for our city upon the hill.)

Always and humbly yours

Cogitans Iuvenis

Friday, April 20, 2012

Political reform or consolidation of power?

The Chinese leaders should have know
better than to pick an Olympic image
so easily lampooned.

Greeting citizen,

 I come with news from the orient, over in the mythical land of the Han people.  Their leader Wen Jiabo has announced a reform package, that some postulate has already been passed, which ostensibly is to curb corruption in the nations government.  Now corruption is a serious problem in China, having had the opportunity to travel to that nation I saw both honest officials and corrupt ones that ruled over their districts over like fat little huttlings.  But when politicians anywhere around the world talk about reforms, it usually means a consolidation of power, be it fiscal, immigration, or other any other thing.  In our republic it usually means more bureaucrats, and the legislation and regulation created to justify their positions; but in this instance, in China, it means much more.
China has gone through fantastic amounts of growth these last few decades.  Their standard of living has increased, and the accounts of many, they are on their way to becoming a potential equal of our republic in terms of prowess and prestige.  However, this has happened many times before.  China opens up their continent, driving wealth into the coasts; yet, the interior is too isolated, rugged, and the surrounding regions to unstable to have the wealth come from anywhere but the coast. This makes the coastal states prosperous; however the interior states lag, which creates social unrest.  This unrest helped lead to the fall of the Qing Dynasty, and to Nationalist government after it. The country is either poor and stable, or economically growing and unstable. Stratfor has written about it extensively, unfortunately most of their articles are not free, but their weekly free reports are worth checking out.  Pulling a record from their compendium, it details just this tension. When the Chinese were issuing their $ 586 billion stimulus, which should give any fiscally sensible person pause considering that the stimulus was around 10% of their GDP, there was political infighting over where it should go, the coastal states, or the interior.

What many of us citizens of res publica don’t realize, or can even appreciate, is that China has historically been an unstable country.  I, Cogitans Iuvenis, will humbly give you a short history lesson.  The largest demographic in China, the Han, historically have occupied the fertile regions along the coast and the interior near the coast. However, these regions were wide open to attack and occupation by neighboring peoples.  To protect themselves, the Han Chinese chose to expand and exert control over the surrounding regions, finding natural barriers like mountains or deserts upon which they could anchor and secure their nation. This forces them to control vast areas of land and numerous people.  When the empire was strong, the central government ruled, and when weakness persisted, or when provinces became wealthy enough, the far flung administrative districts would largely govern themselves.  Issues would then arise when the central bureaucracy tried to re-exert control, or if the province grew wealthy enough to challenge the central leadership openly.  This has gone on for millennia.  Mao first tried to start his communist revolution in Shanghai, but he failed. Why would people in a prosperous city want a communist revolution that would seek to take their wealth and give it to others?  Something we should think about, as a communist revolution has never succeeded in a wealthy nation. It wasn't the Americas', Englands, or Japans of the world that became communists, or even had viable communist parties. It was the North Koreas and Czarist Russias of the world. He then went on his Long March to the poorer regions of the interior, where he rallied a peasant army that was eventually victorious largely due to the corruption of the nationalist leaders.  The CCP is very aware of this, and are cognisant of the Mandates from Heaven idea that runs strong in their culture.  Their leaders have staked their legitimacy on economic growth, but knowing that economic growth will create instability that might lead to a possible overthrow of their political system, they seek to manage it.  This is what their ‘reform’ is all about.  The cause of this reform is the downfall of the governor of Chonging province and the whispers of corruption about him.
Former governor of Chongqing province, Bo Xilai, repeatedly ignored central government directives and followed his own economic policy. Only a short while ago, economic pundits were praising the Chongqing economic model, which made it one of the fastest growing cities in the world. Ostensibly a scandal, the murder of a prominent English businessman, was the reason for Bo Xilai being cast aside, but the real reason was due to politics.  There is a growing divide between the coastal and interior provinces.  The Economist has a handy chart that compares the provinces GDP and GDP per capita as if it were other nations.  Chongqing is the province that has the GDP of Qatar on the first chart, and the GDP per person of Maritius in the other.  What you will immediately notice is Chongqing ranks 24th in GDP and 17th in GDP per capita (It should be noticed that 2011 figures show Congqing at $ 5,341 per person not the 7,170 of the 2010 Economist numbers, either way a useful comparison will be drawn).  There are some coastal regions that have a GDP per capita almost double that.  The nimble minded will point out that situations like this exist in America as well; Delaware has a GDP per capita twice as high as Mississippi. Yet there is one fundamental difference that separates the two examples.  US states are largely allowed to determine their own economic future without direct dictates by the central government; the only thing preventing a state from becoming wealthy is either a lack of natural resources, access to a the coast, and poor self government.  States like Wyoming, ranked 4th in GDP per capita, show that you don’t need to be a coastal state to become relatively wealthy.  Just a government that doesn’t regulate itself to death or make laws that prohibit the utilization of its natural wealth, like say California. 
Chongqing doesn’t have that option, or as much of an option as Wyoming does.  During the boom years the central government allowed governors like Bo Xilai to steer the city’s economic policy. Chinas central government wants to present a unified party system.  And during good times the Chinese government is willing to defer somewhat to local leadership to ensure harmony. This results in local leaders trying to turn their cities into the next spot on the map, which eventually commences with the cycle of malinvestment and grandiose projects doomed for failure.  This happens in US municipalities, China is no different.

With the global recession the Chinese central government is trying to exerting control.  Naturally interior provinces, like Chongqing, view this as detrimental and took exception.  They see that they are being prevented from using the same strategies that the coastal states did to spur economic growth and dynamism.  This has caused political infighting. We now have two major factions within the communist party, leaders and officials of the coastal regions and those of the interior. You could add a third if you include the leaders of the central government. Each one has its own aims. The central government wants to exert more control over the Chinese economy to try and prevent the ebb and flow of instability and unrest that can lead to a change of governments.  The coastal regions want to continue policies that favor their economic growth. And the interior regions want a piece of the pie.  Moreover, Bo Xilai was popular and charismatic, possibly enough so that he could contend for future the leadership position and shift the national focus to the interior; politics, not corruption, is the real reason why Bo was ousted.  And the real reasons for this ‘reform’ are to further consolidate central government power.  
                Now the most perceptive of you citizens will realize that what the central government is doing now will lead to the very instability that China seeks to avoid.  And the fact is that this instability is unavoidable for one simple reason.  Central planning and government intervention on the national doesn’t works, or doesn't work that well. Some nations might get by with some goverment internvention, but typically the ones that do are smaller nations and the goverment is only lightly involed, a case of limited damage really.  The larger the nation gets the less succesful the strategy becomes.  True you will have nations like Japan that werer able to ride the wave for a couple decades, what has happened since the 1990s?  They have the honor of having gone through numerous PMs and economic stagnation.  Japan is relatively lucky that they are a developed nation with rule of law that means they only have economic stagnation.  For China, a still very poor nation with massive amounts of corruption and rule by bureaucrat this means unrest. What does this mean for America? The balance of power? And the ability to get super cheap Angry Birds dolls? More on that later citizens.
Humbly yours,
Cogitans Iuvenis

About Me

My Photo
Seattle resident whose real name is Kevin Daniels. This blog covers the following topics, libertarian philosophy, realpolitik, western culture, history and the pursuit of truth from the perspective of a libertarian traditionalist.